Correlation Between NBI Sustainable and NBI Active
Can any of the company-specific risk be diversified away by investing in both NBI Sustainable and NBI Active at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NBI Sustainable and NBI Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NBI Sustainable Canadian and NBI Active Canadian, you can compare the effects of market volatilities on NBI Sustainable and NBI Active and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NBI Sustainable with a short position of NBI Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of NBI Sustainable and NBI Active.
Diversification Opportunities for NBI Sustainable and NBI Active
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between NBI and NBI is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding NBI Sustainable Canadian and NBI Active Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBI Active Canadian and NBI Sustainable is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NBI Sustainable Canadian are associated (or correlated) with NBI Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBI Active Canadian has no effect on the direction of NBI Sustainable i.e., NBI Sustainable and NBI Active go up and down completely randomly.
Pair Corralation between NBI Sustainable and NBI Active
Assuming the 90 days trading horizon NBI Sustainable is expected to generate 3.54 times less return on investment than NBI Active. In addition to that, NBI Sustainable is 2.13 times more volatile than NBI Active Canadian. It trades about 0.04 of its total potential returns per unit of risk. NBI Active Canadian is currently generating about 0.34 per unit of volatility. If you would invest 2,338 in NBI Active Canadian on December 3, 2024 and sell it today you would earn a total of 121.00 from holding NBI Active Canadian or generate 5.18% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.39% |
Values | Daily Returns |
NBI Sustainable Canadian vs. NBI Active Canadian
Performance |
Timeline |
NBI Sustainable Canadian |
NBI Active Canadian |
NBI Sustainable and NBI Active Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NBI Sustainable and NBI Active
The main advantage of trading using opposite NBI Sustainable and NBI Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NBI Sustainable position performs unexpectedly, NBI Active can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in NBI Active will offset losses from the drop in NBI Active's long position.NBI Sustainable vs. NBI Sustainable Global | NBI Sustainable vs. NBI Active Canadian | NBI Sustainable vs. NBI Liquid Alternatives | NBI Sustainable vs. NBI Global Real |
NBI Active vs. TD Active Preferred | NBI Active vs. RBC Canadian Preferred | NBI Active vs. Dynamic Active Preferred | NBI Active vs. NBI Global Real |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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